Both Montana and Massachusetts are suing the SEC after the agency voted in March to greatly scale back states’ rights to police Regulation A deals before they are sold to the public.

As part of that effort, Montana had asked the SEC to stay the rule until a federal appeals court could decide the merits of the case.

Regulation A is a capital-raising rule that has been on the books for years, but was rarely used. It previously only permitted companies to raise up to $5 million through public deals. Those deals were also subject to “Blue Sky” laws and had to be registered in every state where they were sold.

Critics said the low dollar threshold, coupled with the burdensome state registration requirements, were the two main hurdles that deterred companies from taking advantage of Regulation A.

In 2012, Congress required the SEC to boost the threshold to $50 million from $5 million.

States and the SEC differ over whether Congress intended to permit the agency to carve the deals out from state oversight.

The SEC’s rule automatically pre-empts states from reviewing deals over $20 million. For smaller transactions, companies can choose to undergo state review, or opt out and face heftier disclosure requirements.